BFI: Only 7% of UK films make profit

SCREEN FILM SUMMIT: Statistics from the British Film Institute (BFI) also show the need for UK growth in Asia.

Just 7% of UK films make a profit, according to figures revealed at the BFI Southbank this morning at the Screen Film Summit.

David Steele, acting head of research and statistics at the BFI, presented the figures which looked at 613 British films produced or co-produced in the UK from 2003-2010.

The stats showed that just 3.1% of films with budgets under £500,000 turned a profit. The numbers increase as budgets rise:

£0.5m-£2m: 4.1%

£2m-£5m: 4.6%

£5m-£10m: 12.1%

£10m+: 17.4%

Speaking on stage, Steele said: “What does one do faced with those sorts of numbers? Clearly, portfolio investment is necessary to negate the risk and secondly, qualitative judgement. Try to choose filmmakers projects that have above average chance of making a profit. Some can do that better than others.”

The figures only included theatrically released films and were calculated using a statistical method of estimated profitability that the BFI developed by looking at a large dataset of lottery funded films.

“We’re fairly confident in the accuracy,” added Steele.

Underpowered in Asia

Steele also highlighted that while the UK remains the third largest film market in the world – after the US and Japan – China will overtake in the coming years.

“China is at number six but is moving up fast and is expected to take over the UK in 2018,” said Steele. “After many years of relative stability, the China factor is going to disrupt things in the next few years.”

Turning to exporting UK films, Steele noted there was work to be done to foster relations in Asia.

“We are strong in the EU and US but underpowered in Asia and the rest of the world,” he stated. “So in the most rapidly growing part of the world economy we are underpowered so something has to be done, like trade delegations to China, to crack those markets.”

BFI CEO Amanda Nevill is in China this week with the Prime Minister to beef up British film’s presence in the country.

He added: “It’s a challenge but a lot of those of those markets use administrative controls to semi-protect their markets so it’s not just a case of a level playing field. There are considerable institutional barriers to be overcome as well as marketing barriers.”

Future

Looking 10 years into the future, Steele said cinema would continue to flourish as “people love the experience and watching a film with others will still be special”.

He also predicted that wide-release films will continue to retain a theatrical window as “many consumers are unaware and not hostile to the gap between release and home entertainment”.

However, he said that most narrow release films would go day-and-day with VoD and prove promotional for these smaller features.

With a third of all new TVs currently sold being smart TVs, he predicted that nearly all sets would be internet connected by 2023, with VoD completely replacing physical video.

He added that feature films would be made with short-form spin-offs for the mobile market.

Readers' comments
(11)

Is that percentage using box office or when the film has been sold/recouped its initial investment in distribution and box office? If we're talking as investment, a lot of films will clear their investment once sold into distribution. Also, is this skewered by including every film - micro budgets not distributed etc because that will skew this massively.

Having just come back, for the fifth year running, from the PrimeExchnage Workshop in India this is one market that has changed out of all recognition in this time. There is now a young generation of Indian film-makers looking to the wprld for their audience, and aiming to make English language films. If we do not radically alter the quality of our work we will have no indigenous film making industry within a generation, and we will be back to the hobbyists of the early '90's scenario.

This is not helpful to UK producers. It should be noted that the data is based on a model derived from the performance of BFI/UK Film Council films so is hardly representative. They have mostly backed niche arthouse films with limited audiences for cultural purposes, or poured many hundreds of thousands into films from a narrow group of producers getting repeat awards and basically funded the above the line costs for bloated budgets. So how does this research reflect on savvy indie producers that don't rely on subsidy funding, making commercial films on sensible budgets aimed at the international market? Badly.

Whilst I would agree your first and closing statements in that the statistics are not helpful and a misleading view on how you measure of success, I also think it is erroneous/rude to label those films in the way that you have and to be dismissive about their success purely because of the BFI's methodology. I'm sure the producers of those films will be adding their comments here soon. The King's Speech, Bend it Like Beckham, Bright Star, Adulthood, Touching the Void, Red Road, London to Brighton, In My Father's Den, The Wind That Shakes the Barley, The Selfish Giant, Gosford Park, the Magdalene Sisters, Man on Wire, Bloody Sunday, The Last King of Scotland and I can go on and on....

I don't think "Anon 3-Dec" is commenting on the quality or merits of lottery funded films? Fact is the lottery funds do go into films where the cultural remit is more important than commercial potential...so to base a profitability model for all UK films made from 2003-2010 on them is surely flawed. Through the work I do (hence I am another "Anon"...) I have seen the budgets of some of the films made with lottery funding and there is no doubt that budgets could be tighter towards the upper end of the awards scale, meaning the lottery then helps more films get made and all those films perform better.

Is this not actually an admission that only about 7% of lottery funded films make a profit? Perhaps, for the sake of transparency and accountability of public funds, and seeing the BFI has raised this matter, they should issue a list with funding awards made and revenues received for each film since the lottery finance came into being, from the Arts Council/ four lottery franchises (remember them!) to date. Profitability is not the only measure, particularity when it seems 93% do not make a profit, there is also the amount that gets recouped

I'm surprised that the statistics are presented in this way since it doesn't bring any insights into what actually works and what doesn't. I'm sure that if we start by dividing all the films into two basic categories, films made with subsidies that most of the time are semi-political local stories, and secondly genre films that where made to be universal and commercial - we would see very different numbers. Further I would like to see each of the categories broken down by genre, this would I'm sure also highlight a huge difference between commercial genre films like comedy and horror and subsidised dramas for example. This would show that commercial genre films are far more lucrative and successful that subsidised dramas for example. Why hide this obvious fact and skew the data by mixing everything in the same pot? I suspect that it would show that the subsidised films are by far under performing compared to the commercial genre films. Not all films are equal under the sun, and they shouldn't be, there's need for all of them but don't hide the obvious difference.

seems the last time the lottery (UKFC) record was analysed was 2011 as reported in the guardian - http://www.guardian.co.uk/film/2011/jul/30/uk-film-council-winners-losers

For lottery awards over 300k average recoupment was 20 per cent. This seems low surely compared to the industry in general? so if that level of performance is repeated across the board on projects backed by UKFC/BFI, then the 7% quoted across all films is a false conclusion. Definitely damaging for the BFI to publicly proclaim this at a high profile event that has been widely picked up on in the media as a news story.

I wish to add my concern that a major flaw in this research conclusion is that the BFI and its forerunners clearly do not look at film primarily in commercial terms. As an example look at the recent film 'Spike Island' one of their highest awards to date. A total of £ 940,000 of production awards was granted so the budget is presumably around £ 2m, which anyone with knowledge of the current market is completely unviable. Then £ 300,000 of "big audience" distribution funding was given, which is match funding so the P&A budget was at least £ 600,000. As far as I can ascertain the film grossed about £ 110,000 so after Vat, exhibitor and distributor fees, a net of around £ 25,000. So the distribution award recoups nothing as the distributor P&A contribution is repaid first and the film is unlikely to make any money back from the UK, its main market, to repay the production award as the distributor P&A is still to be recovered. Any overseas sales will be swallowed up in sales costs and finance senior to the BFI award, so I expect the BFI will be making a 100% provision against the film in the accounts soon. Total investment incl. development £ 1,254,550. So I don't think the record of those who make this kind of financial decision can be used to reflect on the financial performance of UK film generally. Comparable films without BFI backing are being made for 30-50% of this amount, and if they are not tipping into profit are at least giving their backers most of their investment back.

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